Most Multifamily/Commercial Lenders Expect Higher Volumes: MBA

Top multifamily and commercial lenders generally are optimistic about their individual production growth but expect loan risk to increase and loan return to moderate, the Mortgage Bankers Association finds.

Ninety-one percent of these lenders expect origination to grow in 2014 and 48% anticipate an overall increase at least 5%. Sixty-four percent of individual companies forecast their own volumes will jump 5% or more.

“Commercial and multifamily lenders anticipate a market in which lending continues to grow and their firm gets a bigger piece of the pie,” said Jamie Woodwell, MBA’s VP for commercial real estate research in a press release Wednesday. “Borrowers’ appetites to take out new loans are expected to remain strong, but perhaps drop a bit from 2013 levels. The resulting competition to lend leads originators to expect loan risk to increase marginally in the face of moderating returns.”

Sixty-five percent of respondents anticipate a “very strong” appetite among firms to make loans and 23% anticipate a “very strong” appetite among borrowers to take out loans, the survey finds.

The percentage of respondents that forecast “medium” to “somewhat high” loan risk for this year is 89%, in contrast to 2013 when 88% of respondents characterized their loans as having “medium” to “somewhat low risk.”

Seventy-four percent expect loans to be “medium” return this year. Just 50% characterized their loans as “medium” return last year.

A majority of respondents expect originations for commercial mortgage-backed securities, commercial banks and life companies and pension funds to increase, and for originations for Fannie Mae, Freddie Mac and FHA to decrease, according to the MBA.